Families spending less after being ‘scarred’ by years of sky-high inflation, Bank of England warns

Britons have been left ‘scarred’ by years of high inflation and are now spending less as a result, a Bank of England official has said.

Catherine Mann, a member of the committee that sets interest rates, said the inflation shock of 2021-22 means prices are now 30 per cent higher than they were in 2019, pre-Covid. 

She added: ‘UK households have experienced 12 years of inflation in a little over two years. 

‘The rapid increase has scarred consumers, even as inflation has moderated.

‘Consumers who have experienced difficult economic times learn from these episodes – they become more pessimistic about personal finances and continue to spend less for many more years.’ 

The blow to the High Street from reduced spending is being exacerbated by worries about tax rises in the Budget, according to the British Retail Consortium (BRC). 

Spending fears: Catherine Mann, a member of the committee that sets interest rates , said the inflation shock of 2021-22 means prices are now 30% higher than they were in 2019 pre-Covid

With shoppers staying away, the group said total footfall in UK shopping areas in September was 1.8 per cent lower than in the same period last year.

BRC boss Helen Dickinson said: ‘Low confidence ahead of a potential tax-rising Budget kept many shoppers away from retail locations in September.’

This was made worse by Tube strikes in London and heavy rain. High Streets saw a dip of 2.5 per cent compared with the previous September, retail parks 0.8 per cent and shopping centres 2 per cent.

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